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LEASE CANDLEWOOD OFFICE CENTER 2600 TROY CENTER DRIVE TROY, MICHIGAN KIRTS OFFICE CENTER ASSOCIATES, L.L.C.

Office Lease Agreement

LEASE CANDLEWOOD OFFICE CENTER 2600 TROY CENTER DRIVE TROY, MICHIGAN KIRTS OFFICE CENTER ASSOCIATES, L.L.C. | Document Parties: Kirts Development, LLC | KIRTS OFFICE CENTER ASSOCIATES, LLC | SOMANETICS CORPORATION You are currently viewing:
This Office Lease Agreement involves

Kirts Development, LLC | KIRTS OFFICE CENTER ASSOCIATES, LLC | SOMANETICS CORPORATION

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Title: LEASE CANDLEWOOD OFFICE CENTER 2600 TROY CENTER DRIVE TROY, MICHIGAN KIRTS OFFICE CENTER ASSOCIATES, L.L.C.
Date: 7/27/2009
Industry: Medical Equipment and Supplies     Sector: Healthcare

LEASE CANDLEWOOD OFFICE CENTER 2600 TROY CENTER DRIVE TROY, MICHIGAN KIRTS OFFICE CENTER ASSOCIATES, L.L.C., Parties: kirts development  llc , kirts office center associates  llc , somanetics corporation
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Exhibit 10.1

LEASE

CANDLEWOOD OFFICE CENTER
2600 TROY CENTER DRIVE
TROY, MICHIGAN

KIRTS OFFICE CENTER ASSOCIATES, L.L.C.

AS LANDLORD,

AND

SOMANETICS CORPORATION

AS TENANT

DATE: July 22, 2009

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

 

Section

Page

 

 

 

 

 

 

 

1.

 

Basic Lease Terms and Provisions

 

 

1

 

2.

 

Premises

 

 

2

 

3.

 

Contingency for Lender Approval/Term

 

 

3

 

4.

 

Rent

 

 

7

 

5.

 

Operating Expenses

 

 

8

 

6.

 

Character of Occupancy

 

 

10

 

7.

 

Services and Utilities

 

 

11

 

8.

 

Quiet Enjoyment

 

 

12

 

9.

 

Maintenance and Repairs

 

 

12

 

10.

 

Alterations and Additions

 

 

13

 

11.

 

Entry by Landlord

 

 

14

 

12.

 

Construction Liens

 

 

14

 

13.

 

Damage to Property, Injury to Persons

 

 

15

 

14.

 

Insurance

 

 

16

 

15.

 

Damage or Destruction to Building

 

 

17

 

16.

 

Condemnation

 

 

17

 

17.

 

Assignment and Subletting

 

 

18

 

18.

 

Estoppel Certificate

 

 

19

 

19.

 

Default

 

 

19

 

20.

 

Completion of Premises

 

 

23

 

21.

 

Removal of Tenant's Property

 

 

25

 

22.

 

Holding Over

 

 

26

 

23.

 

Parking Areas

 

 

26

 

24.

 

Surrender and Notice

 

 

26

 

25.

 

Acceptance of Premises by Tenant

 

 

26

 

26.

 

Subordination and Attornment

 

 

26

 

27.

 

Payments after Termination

 

 

28

 

28.

 

Authorities for Action and Notice

 

 

28

 

29.

 

Security Deposit

 

 

29

 

30.

 

Liability of Landlord

 

 

29

 

31.

 

Brokerage

 

 

29

 

32.

 

Signage

 

 

29

 

33

 

Name of Building Project

 

 

29

 

34.

 

Area of Premises

 

 

30

 

35.

 

Furnishing of Financial Statements

 

 

30

 

36.

 

Miscellaneous

 

 

30

 

37.

 

Representations

 

 

32

 

38.

 

Environmental

 

 

33

 

39.

 

Consent Judgment and Condominium

 

 

33

 

EXHIBITS

 

 

 

 

 

Exhibit A

 

Site Plan/Location of Premises

Exhibit B

 

Rules and Regulations

Exhibit C

 

Construction Schedule

Schedule 1

 

Legal Description of the Building Complex

 


 

CANDLEWOOD OFFICE CENTER
TROY, MICHIGAN

LEASE

     THIS LEASE is made this 22 nd day of July, 2009, between KIRTS OFFICE CENTER ASSOCIATES, L.L.C., a Michigan limited liability company, (“Landlord”), whose address is Columbia Center, 101 W. Big Beaver Road, Suite 200, Troy, Ml 48084, and SOMANETICS CORPORATION, a Michigan corporation (“Tenant”) whose address is 1653 East Maple Road, Troy, Michigan 48083.

 

1.

 

Basic Lease Terms and Provisions:

          The following is intended to summarize the principal terms of this Lease, but is not intended to be all inclusive. In the event that anything contained in this Paragraph 1 conflicts with other provisions hereinafter contained in this Lease, the latter shall be deemed to control in the absence of express statements to the contrary.

 

A.

 

Building: Candlewood Office Center
              2600 Troy Center Drive
              Troy, Michigan

 

 

B.

 

Leased Premises or Premises: Consisting of all of Unit 2 of the Candlewood Hotel/Office Center Condominium including the Building located thereon, comprising approximately Forty-seven Thousand Eight Hundred Sixty-eight (47,868) rentable square feet, and any adjacent lawn area or parking areas (equal to approximately 204 parking spaces on the date hereof) included in such Unit (and the right to use all parking spaces granted to the Landlord under that certain Parking Easement Agreement dated September 25, 1997 recorded at Liber 17955, Page 513, Oakland County Records, as amended by that certain First Amendment to Parking easement Agreement dated April 20, 1998 recorded at Liber 18576, Page 592 Oakland County Records (the “Parking Easement”)).

 

 

C.

 

Term: Eighty-seven (87) full calendar months and one partial month (December, 2009) commencing upon December 15, 2009 (the “Commencement Date”), and terminating the last day of the eighty-seventh full calendar month after the Commencement Date (“Termination Date”), all subject to the terms of Paragraph 20 of the Lease.

 

 

D.

 

Base Rent:

1


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Per

 

 

 

 

 

 

 

 

 

 

Square Foot

Period

 

Monthly

 

Annually

 

Rental Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

Commencement Date through the 15 th full calendar month after the Commencement Date:

 

$

36,898.25

 

 

$

442,779.00

 

 

$

9.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months 16-27 after the month in which the Commencment Date occurs:

 

$

37,815.72

 

 

$

453,788.64

 

 

$

9.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months 28-39 after the month in which the Commencment Date occurs:

 

$

38,773.08

 

 

$

465,276.96

 

 

$

9.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months 40-51 after the month in which the Commencment Date occurs:

 

$

39,730.44

 

 

$

476,765.28

 

 

$

9.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months 52-63 after the month in which the Commencment Date occurs:

 

$

40.727.69

 

 

$

488.732.28

 

 

$

10.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months 64-75 after the month in which the Commencment Date occurs:

 

$

41,764.83

 

 

$

501,177.96

 

 

$

10.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months 76-87 after the month in which the Commencment Date occurs:

 

$

42,801.97

 

 

$

513,623.64

 

 

$

10.73

 

 

 

E.

 

Operating Expenses: Tenant is responsible for all of the Operating Expenses of the Premises and the Building and the Premises’ pro rata share, if any, of the expenses of the Building Complex as such terms are defined herein.

 

 

F.

 

Use: Office use, assembly and packaging, engineering, research, medical equipment testing, development, marketing, sales, finance, administration, product service, storage, shipping and receiving and all other uses permitted by the City of Troy and applicable law.

 

 

G.

 

Maximum Occupancy [Intentionally Deleted]

 

 

H.

 

Security Deposit: [Intentionally Deleted]

 

 

I.

 

Broker: Whitehall Realty Company, CB Richard Ellis and Kirco Management Services, Ltd.

 

 

J.

 

Building Complex: All of the land and improvements included within the Candlewood Hotel/Office Center Condominium.

 

2.

 

Premises:

          Landlord hereby leases to Tenant those certain premises designated on the Plan attached hereto as Exhibit “A” (the “Premises”), as more particularly defined in subparagraph B of Paragraph 1 hereof, together with: (i) an exclusive right to use, subject to the provisions hereof, and that certain Master Deed for Candlewood Hotel/Office Center Condominium recorded at Liber 17654, Page 812 with the Oakland County, Michigan Register of Deeds (the “Master Deed”), all appurtenances thereunto, including but not limited to, all limited and general common elements benefiting Unit 2, including parking areas; and (ii) the rights of the Landlord under the Parking Easement. This Lease is subject to the terms, covenants and conditions set forth herein and Tenant and Landlord each covenant as a material part of the consideration for this Lease to keep and perform each and all of said terms, covenants and conditions by it to be

2


 

kept and performed and that this Lease is made upon the condition of such performance. Except as expressly set forth herein, Tenant agrees to accept the Premises in their “AS IS” “WHERE IS” physical condition and “WITH ALL FAULTS” with out any agreements, representations or obligations on the part of Landlord as to the condition of the Premises or Building.

          Notwithstanding anything to the contrary contained in this Lease, if the Landlord’s construction work to make the Premises Ready for Occupancy shall contain latent defects discovered within one (1) year from the Commencement Date, or one (1) year after completion thereof, if later, Tenant shall report such latent defects to Landlord, whereupon Landlord shall make reasonable commercial efforts to cause the contractor performing such work to correct such defect. Landlord shall also obtain, to the extent any personal property is purchased and installed in the Premises in connection with such construction, all manufacturers’ warranties in connection with such personal property and shall make reasonable commercial efforts to cause any defects thereto to be repaired pursuant to such warranties.

          Provided Tenant is not in default under the Lease beyond any applicable grace or cure period, Tenant or a Permitted Assignee (as hereinafter defined), but not any other assignee or sublessee, this right being personal to the original Tenant and a Permitted Assignee, shall have the right to expand the Premises (the “Expansion”) subject to the following conditions: (i) Tenant and Landlord shall work collaboratively to provide plans and specifications reasonably acceptable to Landlord and Tenant; (ii) the party performing such construction work shall be able to obtain any and all necessary consents or approvals for construction of the improvements; (iii) all such improvements shall comply in all respects with all applicable laws and ordinances; (iv) if Landlord is performing the work, Kirco Manix Construction, LLC, or an affiliate of Landlord, shall be retained as the general contractor or to provide construction management services at its then prevailing rates; (v) the party performing such work shall provide lien waivers and title insurance coverage as such construction progresses; and (vi) if the Tenant is the party performing such work, Tenant shall comply with all other requirements of this Lease relating to Alterations, as set forth in Article 10 hereof, with regard to such Expansion. The Base Rent, any increases thereto and the timing of the construction of the Expansion shall be agreed upon between Landlord and Tenant as set forth below.

          Tenant shall notify Landlord of its desire to have the Expansion built, which notice shall include the approximate parameters of the desired Expansion, including the approximate square footage and location of the Expansion. The parties shall negotiate, in good faith, within ninety (90) days after Landlord’s receipt of Tenant’s notice, the Base Rent for the Expansion, including any increases thereto; the timing of the construction of the Expansion; and all other matters; and Landlord shall determine the availability of equity for, and the availability and rates of financing of, the construction of such Expansion. In the event that the parties fail to agree upon the terms and conditions of the construction and leasing of the Expansion within such ninety (90) day period, Tenant shall have the right to proceed to construct the Expansion, at its sole cost and expense, pursuant to the terms and conditions set forth in the immediately preceding paragraph and the other provisions of this Lease relating to Alterations, except that Tenant shall select the general contractor or construction manager who will be undertaking the work, subject to Landlord’s consent which shall not be unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing, if Tenant constructs the Expansion, as set forth in the preceding sentence, Kirco Manix Construction, LLC, or an affiliate of Landlord, shall have the right to bid on the construction work. If the Tenant constructs the Expansion, at its sole cost and expense, the Base Rent shall not be increased as a result of the construction of the Expansion. The parties shall execute and deliver an amendment to this Lease consistent with the foregoing prior to the construction of the Expansion in form and substance reasonably satisfactory to Landlord and Tenant. Neither Landlord nor Tenant shall be obligated to pay any additional brokerage commission in connection with the leasing of the Expansion except if Tenant has engaged Whitehall Realty Company dba Whitehall Real Estates Interests (“Whitehall”) to represent Tenant in connection with such Expansion, and Whitehall takes an active part in such negotiations, Landlord shall be obligated to pay Whitehall a brokerage commission pursuant to a separate Registration and Commission Agreement between Landlord and Whitehall dated April 29, 2009.

 

3.

 

Contingency for Lender Approval/Term:

 

(a)

 

It is acknowledged that this Lease is subject to, and the following items are conditions precedent to, the Landlord’s obligations under this Lease: (i) the approval of the existing mortgagee of the Premises as of the date hereof, Flagstar Bank, successor in interest to Metropolitan Realty Company, L.L.C. (“Flagstar”) to the terms and conditions of this Lease

3


 

 

 

 

(“Lender Lease Approval”); and (ii) the closing of a modification of the loan secured by the Premises between Landlord and Flagstar (“Loan Closing”). Landlord shall make reasonable commercial efforts promptly after execution of this Lease, to obtain Lender Lease Approval and to cause the Loan Closing to occur. Landlord shall notify Tenant when it has obtained Lender Lease Approval and/or Loan Closing and, shall further provide a Schedule of Construction for Tenant’s review and approval, if different from Exhibit C attached hereto. Upon Landlord and Tenant agreeing upon a Schedule of Construction, if different from Exhibit C attached hereto, the parties shall execute a side letter agreement containing such schedule which shall replace Exhibit C attached hereto. In the event that Lender Lease Approval and Loan Closing do not occur within thirty (30) days after the date of the full execution of this Lease, Landlord shall have the right to terminate this Lease by written notice to Tenant within five (5) business days after the expiration of such thirty (30) day period.

 

 

(b)

 

The term of this Lease shall be for the period referred to in subparagraph C of Paragraph 1 hereof (the “Primary Lease Term”) commencing at 12:01 a.m. on the Commencement Date, and terminating at 12:00 midnight on the Termination Date, unless sooner terminated pursuant to this Lease.

 

 

(c)

 

If the Term begins on a day other than on the first day of the month, Tenant shall pay proportionate rent at the same monthly rate as set forth in Paragraph 1.D. hereof (also in advance) for such partial month and the abatement provided below will apply and all other terms and conditions of this Lease shall be in force and effect during such partial month. In the event Landlord fails to deliver the Premises on the Commencement Date because the Premises are not then Ready for Occupancy (as hereinafter defined) or for any other cause beyond Landlord’s control, except as otherwise provided herein, Landlord shall not be liable to Tenant for any damages as a result of Landlord’s delay in delivering the Premises and the Commencement Date shall be postponed until such date as the Premises are Ready for Occupancy and the Termination Date shall be postponed for a like number of days. Upon delivery of the Premises ready for Occupancy the parties agree to enter into a Supplement to Lease or a Suite Acceptance Letter which shall stipulate the Commencement Date and Termination Date of this Lease.

 

 

 

 

Notwithstanding the foregoing, should the Commencement Date not have occurred on or before December 15, 2009, subject to (aa) an extension of one day for each day beyond the date Tenant is required to respond to Landlord’s plans pursuant to Paragraph 20 hereof that Tenant fails to so respond, (bb) extension for any delays in the Premises being Ready for Occupancy due to the acts or omissions of Tenant, or its subtenants, assignees, and their respective partners, stockholders, members, directors, officers, agents, employees, contractors, clients, customers and invitees (collectively “Tenant’s Parties”), and (cc) exension for any force majeure events (as maybe extended, the “Proposed Delivery Date”), Tenant shall receive a credit against Base Rent in the amount equal to: (i) Five Hundred Dollars ($500) per day for each of the first thirty-one (31) days between the Proposed Delivery Date and the Commencement Date when the Commencement Date does not occur; (ii) Seven Hundred and Fifty Dollars ($750) per day for each of the next thirty-one (31) days (days 32-62) between the Proposed Delivery Date and the Commencement Date for when the Commencement Date does not occur; and (iii) One Thousand Five Hundred Dollars ($1,500) per day for each of the next thirty (30) days (days 63-92) between the Proposed Delivery Date and the Commencement Date for when the Commencement Date does not occur.

 

 

 

 

Subject to (aa) an extension of one day for each day beyond the date Tenant is required to respond to Landlord’s plans pursuant to Paragraph 20 hereof that Tenant fails to so respond, (bb) extension for any delays in the Premises being Ready for Occupancy due to the acts or omissions of Tenant’s Parties, and (cc) extension for any force majeure events, if the Premises are not Ready for Occupancy on or before February 1, 2010 (as such date may be so extended, the “Outside Delivery Date”), then Tenant

4


 

 

 

 

shall have the option, on Landlord’s behalf, to perform or cause to be performed the construction work required to make the Premises Ready for Occupancy by providing written notice to Landlord within ten (10) business days after the Outside Delivery Date. Should Tenant not deliver such written notice to Landlord within the 10 business day period specified above, Tenant irrevocably shall have waived its right to perform such construction work under this paragraph. Should Landlord make the Premises Ready for Occupancy within ten (10) business days after receipt of Tenant’s notice hereunder, then Tenant’s election to exercise its self-help right hereunder automatically shall be null and void, Tenant shall occupy the Premises and the Commencement Date shall be deemed to have occurred.

 

 

 

 

In the event that Tenant performs the Landlord’s construction work required to make the Premises Ready for Occupancy pusuant to the foregoing paragraph Tenant shall be entitled to recover from Landlord Tenant’s reasonable costs and expenses in connection with the exercise of such right. Tenant shall provide an invoice with reasonable supporting documentation and Landlord shall pay Tenant for such costs within thirty (30) days after receipt of such invoice.

 

 

 

 

The rent credits and the self-help remedy specified above shall be Tenant’s sole and exclusive remedies against Landlord for its failure to complete the Premises on a timely basis and deliver the Premises Ready for Occupancy to Tenant. In recognition that Landlord must make payments under its mortgage of the Premises, Tenant agrees that the credit against Base Rent may not exceed more than twenty-five percent (25%) of the Base Rent in any month during the Term.

 

 

 

 

Provided that Tenant does not interfere with the Landlord’s work in preparing the Premises to be Ready for Occupancy, Landlord hereby grants to Tenant a license to access the Premises prior to the Commencement Date to allow Tenant to prepare the Premises for Tenant’s use and occupancy, including the installation of Tenant’s equipment, improvements, inventory and personal property and all other work deemed necessary or desirable by Tenant to open and operate the Premises, (collectively “Tenant’s FF&E”), for a period of thirty (30) days prior to the Commencement Date subject to such reasonable conditions as Landlord may deem necessary, including Tenant obtaining all insurance required to be obtained under the terms hereof.

 

 

(d)

 

Subject to Tenant not being in default of this Lease beyond any applicable grace or cure period at the time it notifies Landlord of its desire to renew through and including the execution of a lease amendment providing for such renewal, Tenant or a Permitted Assignee, but not any other assignee or sublessee, this right being personal to the original Tenant and a Permitted Assignee, shall have two (2) consecutive options to renew this Lease (the “Renewal Option(s)”) for a term of five (5) years each for all, but not less than all, of the Premises (the “Renewal Term(s)”) as may be expanded hereunder, commencing on the day after the Expiration Date or the expiration of the first Renewal Term, as applicable, and expiring on the date which is five (5) years thereafter, on the same terms and conditions as set forth herein except that the Base Rent for the relevant Renewal Term shall be the amount agreed upon by the parties pursuant to the terms and conditions set forth in this Section 3(d).

 

 

 

 

In order to exercise a Renewal Option, Tenant must deliver to Landlord written notice of exercise no earlier than twelve (12) months and no later than nine (9) months prior to the Expiration Date or the expiration of the previous Renewal Term, as applicable.

 

 

 

 

Within ninety (90) days after receipt of notice that Tenant desires to exercise a Renewal Option, the parties shall negotiate, in good faith, the Base Rent for the Renewal Term and any annual increases to the same. In the event that the parties fail to agree upon the the Base Rent for the Renewal Term and any annual increases to the same within such ninety (90) days after Tenant’s receipt of Landlord’s notice, Tenant’s notice of election to extend the term shall be null and void and of no force or effect.

5


 

 

 

 

In the event Tenant exercises one or more of the Renewal Options in strict accordance with the terms hereof, Tenant shall execute and deliver an amendment to this Lease consistent with the foregoing within thirty (30) days after receipt by Tenant of the subject lease amendment in form and substance reasonably satisfactory to Landlord.

 

 

 

 

Landlord shall not perform any leasehold improvements in connection with the exercise of any Renewal Options and the Tenant agrees to accept the Premises in its then “AS IS” “WHERE IS” condition and “WITH ALL FAULTS” on the commencement date of the relevant Renewal Term, and Tenant shall not be entitled to any credit or allowance or other economic concession from Landlord for the improvement thereof or otherwise. Neither Landlord nor Tenant shall be obligated to pay any additional brokerage commission in connection with the Renewal Options except if Tenant has engaged Whitehall to represent Tenant in connection with such Renewal Options, and Whitehall takes an active part in such negotiations, Landlord shall be obligated to pay Whitehall a brokerage commission pursuant to a separate Registration and Commission Agreement between Landlord and Whitehall dated April 29, 2009.

 

 

 

 

Tenant shall have no further options to renew the Term beyond the expiration date of the second Renewal Term. The Renewal Options herein granted shall automatically terminate and become null and void and of no force or effect upon the occurrence of any of the following: (1) Tenant either has been or is then currently in default under this Lease beyond any applicable grace or cure period, (2) the early termination of this Lease has been exercised by Landlord or Tenant, (3) the assignment of this Lease by Tenant, or the sublease by Tenant of the Premises, or any part thereof, except for an assignment of this Lease by Tenant to a Permitted Assignee, (4) the failure of Tenant to timely or properly exercise the applicable Renewal Option in strict accordance with the terms of this Paragraph, or (5) in the case of the exercise of the second Renewal Option, the failure of Tenant to timely or properly exercise the previous Renewal Option in strict accordance with the terms of this Paragraph.

 

 

(e)

 

On the last day of the seventy-fifth (75 th ) full calendar month of the Term (the “Early Termination Date”), Tenant or a Permitted Assignee, but not any other assignee or sublessee, this right being personal to the original Tenant and a Permitted Assignee, shall have the one time option (the “Termination Option”) to terminate this Lease by providing written notice to Landlord not more than twelve (12) full calendar months and not less than nine (9) full calendar months prior to the Early Termination Date. Tenant’s Termination Option is conditioned upon Tenant’s compliance with all of the following terms and conditions: (i) Tenant is not in default, nor has been in default beyond any applicable grace or cure period, on the date Tenant exercises the Termination Option, or at any time prior to the Early Termination Date; and (ii) Tenant pays to the Landlord, concurrently with Tenant’s notice to exercise the Termination Option, a termination fee equal to the unamortized cost, on a straight line basis over the entire Term of the cost of the Allowance and brokerage fees paid by Landlord plus the Base Rent due for the first two (2) months after the Early Termination Date (the “Termination Fee”). The parties acknowledge that the Landlord’s damages as a result of such early termination are difficult or impossible to measure and it is agreed that the Termination Fee is the parties’ reasonable estimate of such damages and shall be deemed to be liquidated damages and not a penalty to Tenant. It is agreed between Tenant and Landlord that the Termination Fee shall not limit Tenant’s requirement to comply with all other obligations under the Lease. If Tenant does not notify Landlord of its election to exercise the Termination Option, Tenant will be deemed to have forever waived its Termination Option and, if so requested by Landlord, Tenant shall execute an amendment to lease deleting the Termination Option.

 

 

 

 

In the event Tenant timely and properly exercises the Termination Option, the Lease Term shall terminate effective as of the Early Termination Date. Rent shall be paid through and apportioned as of the Early Termination

6


 

 

 

 

Date, and neither Landlord nor Tenant shall have any rights, estates, liabilities or obligations accruing under the Lease after the Early Termination Date, except such rights and liabilities which, by the terms of the Lease are obligations of the Tenant or Landlord which survive the expiration of the Lease Term. The Termination Option shall automatically terminate and become null and void upon any one of the following: (a) the failure of Tenant to timely or properly exercise the Termination Option and pay the Termination Fee in strict accordance with the terms of this Section; or (b) Tenant is, or has been, in default under this Lease beyond any applicable grace or cure period. In the event that Tenant validly exercises the Termination Option but does not vacate the Premises on or before the Early Termination Date such tenancy shall be deemed to be a holdover tenancy under the terms of the Lease.

 

4.

 

Rent:

          Tenant shall pay to Landlord, as Base Rent for the Premises, the rental set forth in subparagraph D of Paragraph 1 hereof. Rent for the first month of the term hereof shall be prorated based upon the number of days during said month that the Lease Term was in effect. All other rent shall be payable on the first day of each calendar month during the term hereof. All such rent shall be paid in advance without notice, abatement, demand, deduction or offset at the office of the Landlord or to such other place as Landlord may designate in writing. It is the understanding of the parties that the Base Rent is to be absolutely “net” to the Landlord and, except as otherwise expressly provided herein, Tenant shall bear all costs and expenses of whatever kind relating to the Premises, the Building and the Premises’ pro rata share, if any, of the expenses of the Building Complex.

          Notwithstanding the foregoing, Base Rent shall abate for the first three (3) months of the Term (the “Abated Rent”) and if the Commencement Date is other than the first day of a month the Abated Rent shall apply to the Base Rent as prorated for that month and the remaining days of the first month abatement shall be applied to reduce the payment due for the third month of the term so that Tenant has a total of three full months of Abated Rent. The abatement of Base Rent provided herein shall not relieve Tenant from the performance of Tenant’s other obligations under this Lease, including, without limation, the obligation to pay on a timely basis Operating Expenses, as hereinafter defined, and all other additional rent and other obligations under this Lease, which shall become due and payable during the entire Term. In the event of Tenant’s default hereunder, the entire amount of the Abated Rent shall become immediately due and payable and Tenant shall, upon demand of Landlord, immediately pay to Landlord the amount of the Abated Rent. All amounts payable to Landlord under this Lease, including without limitation Base Rent, shall be paid by Tenant to Landlord at the address shown above, or such other place as Landlord may designate in writing from time to time.

          In the event Tenant shall fail to pay, when the same is due and payable, any installment of the Base Rent or any additional rent to be paid by Tenant to Landlord under the terms of this Lease, then at Landlord’s election to do so, such unpaid amounts shall bear interest from the due date thereof to the date of payment at the rate of two percent (2%) per annum in excess of the prime or base rate set by JP Morgan Chase Bank, or its successor, as such rate is increased or decreased, from time to time (the “Default Rate”). In any event, however, Tenant shall be charged a service charge with respect to each monthly installment of rental not received by the due date for said installment. Such service charge shall reimburse Landlord for the additional administrative expenses incurred by Landlord in connection with the collection of such late installment of monthly rental. The service charge shall be the greater of five percent (5%) of the amount over due or unpaid or Fifty and Dollars ($50.00) for any rental not paid by the seventh (7 th ) day of the month. Any interest and service charge to be paid by Tenant pursuant to the foregoing provisions shall be paid along with the next scheduled installment of Base Rent without any additional notice whatsoever.

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5.

 

Operating Expenses:

 

(a)

 

“Operating Expenses” shall:

 

 

 

 

Mean all operating expenses of any kind or nature with respect to the Premises and the Building and the Premises’ pro rata share, if any, of the expenses of the Building Complex as determined in accordance with generally accepted accounting principles and shall include, but not be limited to, all general and special real estate or ad valorem taxes or general or special assessments (which shall be limited to installments falling due during the Term), sewer rents and charges levied against the Premises by any governmental or quasi-governmental authority or any taxes or assessments which shall be levied on the Premises in lieu of or in addition to all or any portion of any such real estate taxes or assessments, or which shall be levied on the rentals of the Premises (other than Landlord’s income taxes), but in this case, the computation shall be made as if this were Landlord’s only building, or which shall be levied on Landlord as a result of the use, ownership or operation of the Premises; the cost of Premises supplies; costs incurred in connection with all energy sources for the common areas of the Building Complex; janitorial services; general maintenance and normal repair of the Premises, including the heating and air conditioning systems of the Building, landscaping maintenance, maintenance, repair, striping and replacement of all parking areas (except for the work that Landlord has agreed to undertake in this Lease, at its sole cost and expense, prior to the Commencement Date, as set forth in Paragraph 20 hereof); association assessments or condominium assessments of the Building Complex allocated to the Premises pursuant to the Master Deed; the costs of rubbish removal, snow removal and service contracts for the HVAC systems of the Building; the cost to repair, alter, remove, reconstruct or improve any part of the Premises as required by governmental requirements in the form of laws, ordinances, regulations, or otherwise enacted or amended after the date hereof; the cost of general maintenance and normal repair of the Premises; insurance in amounts and coverage determined by Landlord or its mortgagee, including fire and extended coverage, rental interruption, sprinkler leakage, plate glass and public liability insurance (but Tenant shall have no interest in such insurance or the proceeds thereof except that Operating Expenses shall not include expenses reimbursed under such policies); labor costs incurred in the operation and maintenance of the Premises, including wages and other payments, costs to Landlord of Workers’ Compensation and disability insurance, payroll taxes, and welfare fringe benefits for employees directly associated with operating the Building; professional building management fees; legal, accounting, inspection and consultation fees incurred in connection with the Premises or any other inspection or consultation fees required for the normal prudent operation of the Premises; the cost of any capital improvements to the Premises or of any machinery or equipment installed in the Premises amortized over the useful life of such item as determined under the Internal Revenue Code, as reasonably agreed by Landlord’s and Tenant’s accountant or chief financial officers, as applicable, plus interest at five percent (5%) of such amortized amount; the common area costs of the Building Complex; and all other charges properly allocable to the repair, operation and maintenance of the Premises in accordance with generally accepted accounting principles.

 

 

 

 

Operating Expenses will not include:

 

 

(a)

 

Replacement of the Building’s roof, walls and foundation;

 

 

(b)

 

Depreciation on the Building Complex or any areas within it;

 

 

(c)

 

Ground lease payments, mortgage principal, interest, penalties and charges, financing and refinancing costs and expenses;

 

 

(d)

 

Costs of replacements to Landlord’s personal property and equipment;

8


 

 

(e)

 

The cost of repairs or replacements due to casualty or condemnation that are reimbursed by third parties;

 

 

(f)

 

Any cost or expense due to Landlord’s breach of this Lease provided that Tenant has timely paid and performed its obligations under this Lease relating to such item;

 

 

(g)

 

Any income, estate, inheritance, or other transfer tax and any excess profit, franchise, or similar taxes on Landlord’s business, except as provided above and any increases in real property taxes resulting from the sale or transfer of the Premises by Landlord;

 

 

(h)

 

All costs and expenses (including lease concessions and allowances), including legal fees, relating to activities for the solicitation and execution of leases of space in the Building;

 

 

(i)

 

Any cost or expense related to removal, cleaning, abatement or remediation of “hazardous material” not directly caused by Tenant and which is not done in the ordinary course of business on the Premises (e.g., cleanup of accidentally spilled paint as opposed to cleanup of hazardous substances which are in quantities which violate environmental laws); and

 

 

(j)

 

Costs to correct construction defects and latent defects of Landlord’s construction work to make the Premises Ready for Occupancy within within one (1) year from the Commencement Date, or one (1) year after completion of such item, if later, which have been reimbursed to the Landlord pursuant to third-party warranties.

 

 

 

If Landlord selects an accrual accounting basis for calculating Operating Expenses, Operating Expenses shall be deemed to have been paid when such expenses have accrued in accordance with generally accepted accounting principles.

 

 

(b)

 

It is hereby agreed that during the Term hereof, Tenant shall pay to Landlord the Operating Expenses. At least thirty (30) days prior to the Commencment Date, Landlord shall notify Tenant of Landlord’s estimate of the amount of the Operating Expenses for the remainder of the calendar year in which the Commencement Date occurs. Beginning with the Commencement Date, the monthly rent to be paid by Tenant to Landlord shall be increased by an amount equal to the estimated amount of Operating Expenses for such year divided by the number of months remaining in the calendar year in which the Commencement Date occurs, with an adjustment to be made between the parties at a later date as hereinafter provided. At least thirty (30) days prior to the commencment of the first full calendar year of the Term and each other calendar year thereafter, Landlord shall provide a budget for the Operating Expenses of the Premises for Tenant’s review, which shall specify any anticipated capital expenditures during the following year in excess of $10,000. In the event that Tenant objects to all or any part of the budget, Tenant shall notify Landlord within thirty (30) days after receipt thereof and the parties shall meet and attempt to resolve any issues. Failure of Tenant to notify Landlord within such thirty-day period shall be deemed to be Tenant’s approval of such budget. Beginning with the first full calendar year of the Term, the monthly rent to be paid by Tenant to Landlord shall be increased by an amount equal to 1/12th of the estimated amount of the Operating Expenses for such calendar year, with an adjustment to be made between the parties at a later date as hereinafter provided. Landlord may, by written notice to Tenant, from time to time, revise its estimate for any year, and subsequent payments by Tenant for such year shall be based upon such revised estimate. As soon as practicable following the end of each calendar year during the Term of this Lease, Landlord shall submit to Tenant a statement setting forth the amount of the actual Operating Expenses, and the amount actually paid by Tenant as Operating Expenses, and the difference, if any, between the actual

9


 

 

 

 

Operating Expenses for the calendar year just completed and the estimated amount of Operating Expenses (on which its rent was based) and which was paid by Tenant for such year and, if Tenant has not paid the full amount of actual Operating Expenses, the balance due shall be paid by Tenant to Landlord within thirty (30) days after Tenant’s receipt of such statement. In the event that the actual Operating Expenses for the calendar year just completed was less than the estimated amount of the Operating Expenses (on which its rent was based) and which was paid by Tenant for such year Landlord shall give a credit to Tenant in such amount, against the next payment of Operating Expenses due hereunder. In addition, with respect to the monthly rent, until Tenant receives Landlord’s estimate for the new calendar year Tenant’s monthly rent for the new calendar year shall continue to be paid at the then current rate, but Tenant shall commence payment to Landlord of the monthly installments of rent on the basis of the new estimate beginning on the first day of the month following the month in which Tenant receives such statement.

 

 

(c)

 

If Tenant occupies the Premises for less than a full calendar year during the first or last calendar years of the term hereof, Operating Expenses for such partial year shall be the actual Operating Expenses for such period and Tenant shall make payments based upon the Landlord’s estimates as provided above. At the end of such period, the Landlord shall provide a statement which shall compare the amounts paid by Tenant to the actual Operating Expenses for the period just completed and Tenant shall pay any additional sums due, or Landlord shall refund to Tenant, if the Term has expired, any sums due the other hereunder using the same method set forth above.

 

 

(d)

 

Landlord’s failure during the Lease Term to prepare and deliver any statements or bills, or Landlord’s failure to make a demand under this Paragraph or under any provision of this Lease shall not in any way be deemed to be a waiver of, or cause Landlord to forfeit or surrender, its rights to collect any items of additional rent which may have become due pursuant to this Paragraph during the Term of this Lease, except as otherwise specifically set forth in this Lease. Tenant’s liability for all additional rent due under this Paragraph 5 shall survive the expiration or earlier termination of this Lease.

 

 

(e)

 

The Building shall be maintained in good order, condition and repair, ordinary wear and tear excepted, in the manner consistent with comparable corporate headquarters in Troy, Michigan.

 

6.

 

Character of Occupancy:

 

 

(a)

 

The Premises are to be used only for those purposes set forth in subparagraph F of Paragraph 1 hereof and no other use. Except for the Special Use Approval, which Landlord has obtained and paid the expenses relating thereto, Tenant shall, at its sole cost and expense, obtain all governmental licenses and permits required to allow Tenant to conduct Tenant’s Use. The parties acknowledge that a special use permit for the Premises was adopted by the City of Troy pursuant to Resolution PC-2009-06-051 (the “Special Use Approval”). Tenant agrees to comply with all applicable laws in connection with its use of the Premises including, without limitation, the foregoing Special Use Approval.

 

 

(b)

 

Tenant shall not suffer nor permit the Premises nor any part thereof to be used in any manner, nor anything to be done therein, nor suffer or permit anything to be brought into or kept therein, which would in any way (i) make void or voidable any fire or liability insurance policy then in force with respect to the Building; (ii) make unobtainable from reputable insurance companies authorized to do business in Michigan any fire insurance with extended coverage, or liability, boiler or other insurance required to be furnished by Landlord under the terms of any lease or mortgage to which this Lease is subordinate at standard rates provided Tenant is not deprived of its intended use of the Premises; (iii) cause or in Landlord’s reasonable opinion be likely to cause physical damage to the

10


 

 

 

 

Building or any part thereof; (iv) constitute a public or private nuisance; (v) impair, in the reasonable opinion of Landlord, the appearance, character or reputation of the Building; (vi) discharge objectionable fumes, vapors or odors into the Building air conditioning system or into the Building flues or vents not designed to receive them; (vii) impair or interfere with any of the Building services; or (viii) constitute waste.

 

 

(c)

 

Tenant shall not use the Premises nor permit anything to be done in or about the Premises which will in any way conflict with any law, statute, ordinance or governmental rule or regulation now in force or which may hereafter enacted or promulgated. Tenant shall give prompt notice to Landlord of any notice it receives of the violation of any law or requirement of any public authority with respect to the Premises or the use or occupation thereof. Landlord shall give prompt notice to Tenant of any notice it receives relative to the violation by Tenant of any law or requirement of any public authority with respect to the Premises or the use or occupation thereof. Further, Tenant shall not use the Premises or permit anything to be done on or about the Premises which will in any way conflict with or violate any private covenant, condition, or restriction recorded against the Building Complex, including, without limitation, the documents and instruments creating and governing the condominium for the Building Complex, if applicable.

 

 

(d)

 

If the Landlord’s work in connection with making the Premises Ready for Occupancy shall not be in compliance with applicable law for a period of ten (10) days after either Tenant has notified Landlord of such circumstances or Landlord otherwise is made aware of the circumstances, or such additional time as may be required due to acts of Tenant’s Parties or acts of god, force majeure, casualty damage, strikes, shortages of labor or materials, or other causes beyond Landlord’s reasonable control, then (i) Landlord shall, within ten (10) days of its receipt of such notice of non-compliance, either make such repair or, if the repair cannot reasonably be completed within such ten-day period, promptly commence the repair within such period and thereafter diligently pursue same to completion, and (ii) if Tenant is unable to and does not use the Premises in its entirety as a result of such violation, Base Rent hereunder shall thereafter be abated until such time as such violation has been corrected or Tenant begins using the Premises again, whichever shall first occur.

 

7.

 

Services and Utilities:

 

 

(a)

 

Landlord agrees to provide janitorial services for the Premises in accordance with specifications and hours to be agreed upon between Landlord and Tenant. Landlord shall cause electric current, water and sewer and natural gas to be supplied to the Premises and measured by separate meters, with one meter for each utility. Landlord shall furnish such snow removal services to the Premises as may, be reasonably required by Tenant.

 

 

(b)

 

Tenant hereby agrees to pay all charges with respect to electrical service furnished to or used within the Premises as and when due to such electrical provider.

 

 

(c)

 

Tenant agrees that Landlord shall not be liable for failure to supply any heating, air conditioning, electrical, janitorial, lighting or other services during any period when Landlord uses reasonable diligence to supply such services, or during any period Landlord is required to reduce or curtail such services pursuant to any applicable laws, rules or regulations, now or hereafter in force or effect, it being understood that Landlord may discontinue, reduce or curtail such services, or any of them (either temporarily or permanently), at such times as it may be necessary by reason of accident, unavailability of employees, repairs, alterations, improvements, strikes, lockouts, riots, acts of God, application of applicable laws, statutes, rules and regulations, or due to any other happening beyond the control of Landlord. In the event of any such interruption, reduction or discontinuance of Landlord’s services (either temporary or permanent), except for the abatement described below,

11


 

 

 

 

Landlord shall not be liable for damages to persons or property as a result thereof, nor shall the occurrence of any such event in any way be construed as an eviction of Tenant or cause or permit an abatement, reduction or setoff of rent, or operate to release Tenant from any of Tenant’s obligations hereunder.

 

 

 

 

Notwithstanding the foregoing, if any utilities are interrupted or discontinued due solely to the negligence of Landlord for a period of ten (10) days after Tenant has notified Landlord of such interruption, or such additional time as may be required due to acts of Tenant’s Parties or acts of god, force majeure, casualty damage, strikes, shortages of labor or materials, or other causes beyond Landlord’s reasonable control, and Tenant is unable to and does not use, the Premises in its entirety as a result of such interruption or discontinuance, Base Rent hereunder shall thereafter be abated until such time as such utilities are restored or Tenant begins using the Premises again, whichever shall first occur.

 

 

(d)

 

Whenever heat generating machines or equipment or excessive lighting (i.e., that which exceeds the typical lighting level used by office tenants in the area in which the Building is located) are used by Tenant in the Premises which affect the temperature otherwise maintained by the air conditioning system, Landlord reserves the right to install supplementary air conditioning units in the Premises in the event Landlord’s independent consulting engineer determines same are reasonably necessary as a result of Tenant’s use of lights or equipment which generate heat loads in excess of those for which the HVAC system is designed and the cost therefor, including the cost of installation, operation and maintenance thereof, shall be prepaid by Tenant to Landlord upon demand by Landlord.

 

8.

 

Quiet Enjoyment:

     Landlord warrants and agrees to defend Tenant in the quiet enjoyment and possession of the Premises from any acts of the Landlord, and all parties claiming by or through the Landlord, during the term of this Lease so long as Tenant complies with the provisions hereof. In the event of any transfer or transfers of Landlord’s interest in the Premises or in the real property of which the Premises are a part, other than a transfer for security purposes only, the transferor shall be automatically relieved of any and all obligations and liabilities on the part of Landlord accruing from and after the date of such transfer.

 

9.

 

Maintenance and Repairs:

 

(a)

 

Subject to reimbursement as a part of Operating Expenses, Landlord shall make all necessary repairs and replacements to the heating, air conditioning and electrical systems located in the Building, and to the common areas, including parking areas, and Landlord shall also make all repairs to the Premises which are structural in nature; provided, however, that Tenant shall make all repairs and replacements arising from its act, neglect or default and that of its agents, servants, invitees and employees.

 

 

 

 

In the event that the Landlord shall deem it necessary, or be required by any governmental authority to repair, alter, remove, reconstruct or improve any part of the Premises or of the Building (unless the same result from Tenant’s act, neglect, default or mode of operation in which event Tenant shall make all such repairs, alterations and improvements), such work shall be at Landlord’s sole cost and expense if due to a violation of law if such law existed on or before the Commencement Date or as a part of Operating Expenses if due to the adoption of a law or an amendment to law after the Commencement Date, then the same shall be made by Landlord with reasonable dispatch, and should the making of such repairs, alterations or improvements cause any interference with Tenant’s use of the Premises, such interference shall not relieve Tenant from performance of its obligations hereunder.

 

 

 

 

Notwithstanding the foregoing, if the Landlord fails to make repairs due solely to the negligence of Landlord for a period of ten (10) days after Tenant has notified Landlord of such disrepair, or such additional time as

12


 

 

 

 

may be required due to acts of Tenant’s Parties or acts of god, force majeure, casualty damage, strikes, shortages of labor or materials, or other causes beyond Landlord’s reasonable control, and Tenant is unable to and does not use, the Premises in its entirety as a result of such repair issue, Base Rent hereunder shall thereafter be abated until such time as such repair is completed or Tenant begins using the Premises again, whichever shall first occur.

 

 

(b)

 

Landlord, at Tenant’s sole cost and expense as a part of Operating Expenses, except as excluded from such definition above, shall maintain the Premises in good order, condition and repair including the interior surfaces of ceilings, walls and floors, all doors, and interior glass partitions or glass surfaces. Landlord shall have no liability to Tenant for any damage, inconvenience or interference with the use of the Premises by Tenant as a result of performing any such work.

 

 

(c)

 

Landlord and Tenant shall each do all acts required to comply with all applicable laws, ordinances, regulations and rules of any public authority relating to their respective maintenance obligations as set forth herein.

 

10.

 

Alterations and Additions:

 

 

(a)

 

Tenant shall make no alterations, additions or improvements to the Premises (each an “Alteration”) or any part thereof without obtaining the prior written consent of Landlord; provided, however, Tenant shall be entitled to make cosmetic, non-structural alterations, additions, modifications and improvements to the Premises, not exceeding $50,000 in each instance, which do not materially adversely affect the Building systems without the requirement of Landlord’s consent, but with notice to Landlord. Neither Landlord consent nor notice to Landlord shall be needed to inspect, install, repair, remove or replace, from time to time, Tenant’s FF&E. Landlord may impose, as a condition to the aforesaid consent, such requirements as Landlord may deem necessary in its reasonable judgment including, without limitation, the manner in which the work is done, a right to require Tenant to use Landlord’s contractor and the times during which it is to be accomplished, provided that Tenant shall not be required to use Landlord’s contractor to the extent such work involves only Tenant’s FF&E and, with respect to all other Alterations, if performed by the Landlord’s contractor, the Landlord shall follow the same procedures it is required to follow when making the Premises Ready for Occupancy pursuant to the provisions of paragraph 20 hereof. In the event that Tenant is entitled to construct the Expansion, such Expansion will not require a separate approval by the Landlord under this subparagraph 10(a), subject to Tenant’s compliance with the other terms of this paragraph and the provisions of this Lease. Tenant further agrees not to connect with Building systems, including electric wires, water pipes, fire safety and mechanical systems, any apparatus, machinery or device without the prior written consent of Landlord.

 

 

(b)

 

All Alterations (whether performed with or without Landlord’s consent as provided herein), shall be deemed a part of the real estate and the property of Landlord and shall remain upon and be surrendered with the Premises as a part thereof without molestation, disturbance or injury at the end of said Term, whether by lapse of time or otherwise, unless Landlord notifies Tenant otherwise, in which event Tenant shall promptly remove, at its sole cost and expense, such alterations and additions and restore the Premises to their condition prior to the making of the same, reasonable wear and tear excepted. All such removal, whether required or permitted by Landlord, shall be at Tenant’s sole cost and expense, and Tenant shall restore the Premises to the condition in which the Premises were prior to the making of the same, reasonable wear and tear excepted. All Tenant’s FF&E including any movable partitions, machines and equipment which are installed in the Premises by or for the account of Tenant, without expense to Landlord, and can be removed without permanent structural damage to or defacement of the Building or the Premises, and all furniture, furnishings and other articles of personal property owned by Tenant and located in the Premises (all of which are herein called “Tenant’s Property”), shall be and remain the property of

13


 

 

 

 

Tenant and may be removed by it at any time during the Term of this Lease. However, if any of Tenant’s Property is removed, Tenant shall repair or pay the cost of repairing any damage to the Building or the Premises resulting from such removal. All additions or improvements which are to be surrendered with the Premises shall be surrendered with the Premises, as a part thereof, at the end of the Term or the earlier termination of this Lease.

 

 

(c)

 

If Landlord authorizes persons requested by Tenant to perform any Alterations or repairs to the Premises, then prior to the commencement of any such work, Tenant shall, on request of Landlord, deliver to Landlord certificates issued by insurance companies qualified to do business in the State of Michigan evidencing that Workers’ Compensation, public liability insurance and property damage insurance, all in amounts, with companies and on forms reasonably satisfactory to Landlord, are in force and effect and maintained by all such contractors and subcontractors engaged by Tenant to perform such work. All such policies shall name Landlord as an additional insured. Each such certificate shall provide that the same may not be cancelled or modified without thirty (30) days’ prior written notice to Landlord.

 

 

(d)

 

Tenant, at its sole cost and expense, shall cause any permitted Alterations, decorations, installations, additions or improvements in or about the Premises to be performed in compliance with all applicable requirements of insurance bodies having jurisdiction, and in such manner as not to interfere with, delay, or impose any additional expense upon Landlord in the construction, maintenance or operation of the Building, and so as to maintain harmonious labor relations in the Building.

 

11.

 

Entry by Landlord:

          Landlord and its agents shall have the right to enter the Premises at all reasonable times and upon reasonable notice for the purpose of examining or inspecting the same, to supply any services to be provided by Landlord for Tenant hereunder, to show the same to prospective purchasers of the Building, to make such alterations, repairs, improvements or additions to the Premises or to the Building of which they are a part as Landlord may deem necessary or desirable, and to show the same to prospective tenants of the Premises (provided that in the event of a bona fide emergency, Landlord may enter the Premises without advance notice solely for the purpose of taking emergency action). Tenant shall have the right to exclude Landlord from entering into portions of the Premises which include proprietary information or trade secrets unless Landlord shall have signed a confidentiality ag


 
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